News
Provincial

Ontario Auditor zaps power firm charges

THE CANADIAN PRESS

Wednesday, December 6, 2017
8:18:58 EST PM

Ontario auditor general Bonnie Lysyk packs her the pages of her annual report as she prepares to leave a news conference in Toronto, Wednesday, Dec.6, 2017. THE CANADIAN PRESS/Frank Gunn ORG XMIT: FNG506

Soaring power prices, wind farms imposed on places that don’t want them and now this: Ontario consumers being dinged by power companies for things such as raccoon traps, scuba gear and staff car washes.

Zapped before by the province’s spending watchdog for its handling of the energy file, Ontario’s Liberal government — heading into an election year — took it on the chin again Wednesday in Auditor General Bonnie Lysyk’s annual report, which found ratepayers have footed the bill for up to $260 million in ineligible expenses under a provincial program that puts the producers on standby to generate power.

She also found ratepayers are paying the cost for large industrial companies’ electricity savings, and that Ontario’s Independent Electricity System Operator (IESO) hasn’t implemented repeated recommendations from the Ontario Energy Board, including one that could save ratepayers $30 million a year.

Lysyk’s latest report looked at a program that pays power generators for fuel, maintenance and operating costs when the IESO puts them on standby to supply energy. Nine generators claimed up to $260 million in ineligible costs between 2006 and 2015, Lysyk said.

About two-thirds of that has been paid back.

One natural gas plant in Brampton “gamed” the system for about $100 million, the energy board, the province’s regulator, has reported.

Generators claimed thousands of dollars a year for staff car washes, carpet cleaning, road repairs, landscaping, scuba gear and raccoon traps, “which have nothing to do with running power equipment on standby,” Lysyk wrote.

One company claimed about $175,000 for coveralls and parkas over two years, she said.

“The program was such that bills could be submitted but without any support for the bills and the bills were being paid, and it wasn’t until more requests were made for detailed information that (the IESO) became aware that there were costs behind that bill that probably shouldn’t be reimbursed,” Lysyk said.

Lysyk had previously skewered the Liberals over electricity, concluding customers paid $37 billion for the government’s decisions to ignore its own planning process for new power projects, and that a $2-billion smart meter program spent double its projected costs and didn’t ensure conservation goals were met.

Her conclusions about the smart meter program led then-energy minister Bob Chiarelli to say the auditor’s numbers were less credible than his because the electricity system is complex and difficult to understand. Lysyk spent 10 years working at Manitoba Hydro.

The program to pay costs when energy suppliers are put on standby began in 2003, when Ontario’s electricity grid had supply issues, but now the province has surplus power.

The OEB found in 2014 the program was relied on less than one per cent of the time to meet domestic demand, and has repeatedly urged it be scaled back to stop reimbursing generators for certain costs.

Doing so would save ratepayers $30 million a year, the OEB says.

Energy Minister Glenn Thibeault said the program and similar ones are important.

“These are programs that ensure that when Ontario families and businesses need electricity, it’s there for them,” he said in a statement. “If these programs were eliminated, reliability would be put at risk.” The IESO is working on a redesign of the electricity market, but Lysyk noted some members of a group advising the IESO on that work for companies that have claimed ineligible costs.

One member resigned his post on Friday.

Lysyk also found that as electricity charges for large industrial ratepayers decrease under a savings program hen they reduce peak use, higher costs result for residential and small business ratepayers.

The program reduced charges for the large ratepayers by $245 million in its first 10 months of 2011, and that same amount was directly added to residential and small business bills, bills, Lysyk wrote.

Since then,charges for residents and small businesses have nearly doubled, while they have decreased for large industrial ratepayers, the auditor found.

Those charges come in the form of the global adjustment, a charge consumers pay for above-market rates guaranteed to power producers in long-term contracts. In 2016, the global adjustment accounted for 85 per cent of residential consumers’ electricity charges, Lysyk said.

Thibeault said the industrial program has successfully reduced peak demand — last year by about 1,300 megawatts, about six per cent of the province’s peak demand.

“That means that this program helped avoid the need to build costly new generation in the longer term, which is a benefit to all ratepayers across the province, both residential and commercial,” he said.

Lysyk also announced through her report that her office would be auditing the IESO’s books. That comes amid one of two accounting disputes the auditor has been engaged in with the Liberal government.

She recently accused the government of purposely obscuring the true financial impact of its 25 per cent cut to hydro bills by keeping billions in debt used to finance that plan off the province’s books. Lysyk said she will audit the IESO because of its role in the hydro plan’s complex accounting scheme.

OTHER HIGHLIGHTS

— Sick days up 29% over five years at 50 schools boards, to 11.6 days per average employee, since Ontario stopped allowing teachers to bank sick days

— Long waits for key biopsies to diagnose cancer; only 46 per cent done within 14-day target

— More households waiting for social housing than people living in the units

— Ontario not ready for major emergency; no updates to preparedness or nuclear plans since 2008 and 2009

— One-third of government advertising spending last year appeared meant to help make government look good — Ontario paid almost $19 million last year to operate and maintain 812 vacant buildings.